I think credible references in the local market place go a long way.  They should be able to reference a couple of real estate or environmental attorneys from mid size to larger law firms and naturally a couple of the leading banks in the market you are engaing the services from.  If it is SBA related the local dominat CDC should also say good workds about projects completed with all hurdles cleared with little effort.  If a firm cannot come up with a reference of each of these sources they are not the real deal.

Hi Dianne:

Your blog prompted a number of responses in LinkedIn groups that bear mentioning here such as:

"A great answer to a sensitive issue. We often need to educate our clients on the need to focus on the overall value of our consulting relationship, not simply the basic upfront costs. Conversely, if your clients are totally focused on cost, as many are in today's economic climate, then be selective about the engagements you take on."

"Many an SOQ or proposal boasts of teams with many years of experience, but the actual people on your project may have little; those with experience may barely be involved in the project. And in some cases, senior people are too busy to give the draft deliverable the hard questions needed. If you find a firm that does these two things well, be glad to pay for it and hold onto them."

"how are we defining 'good' here? Many lenders think that 'good' is always getting results which will allow the deal to go through. There is a growing list of firms who provide low cost, low quality due-diligence reviews that do not adequately quantify the deficiencies and risks of the project. Unfortunately, those providers may also be considered 'qualified' because of the vast number of projects that they do. By the time the lenders or owners find out the real issues, it's too late."

"Some lenders look at the EDD process as just another hoop they have to jump through, and the less expensive a hoop it is, the better. My company decided some years ago that there are certain markets within which we simply will not compete. It's better to do fewer projects and do them properly then to keep down the cost by cutting corners."

"So how do we get our clients informed about poor-quality firms? I make a strong effort not to speak badly about my competitors to a client. Unless I am absolutely certain of their status or practices I will generally say "yeah, good company" when asked about them, and then change the subject."

"I know of several firms that are now indicating in their reports that their reports meet ASTM XXXX, which they clearly do not. When I come across reports that are so bad as to be fraudulent, I have considered turning them into the State Boards, as they are considered engineering products. My discussion with several of the State Boards (a few years back), is that they don't want to deal with it unless it is a design issue, and that the lending industry should monitor the quality of the reports. Anyone else out there that can provide some insight?"

"I continue to be amazed at the low quality of work I see from firms which seem to hang in there year after year. At this point we can only hope that either the market itself will sort out the poor performers (particularly in states with no licensing requirements) or that the disciplinary mechanisms established where licenses are help will evolve so as to be more effective."

This is a great topic, and I'd welcome further discussion upon in the future.  I think the downward price wars has had a negative impact on quality of the Phase I report.  While I work for a bank, I am a risk manager and our focus is on quality.  However our clients (lenders, and their clients... borrowers) have price expectations.  We have continually worked hard for years to increase the quality of Phase I reports we contract, and pricing has increased slightly as well.  A couple things regarding quality that I'm finding that are important are: Corporate Philosophy; Peer Reviewer; Expericence of the Assessor.

If the Corporate Philosophy for Phase I reports is that they are loss leaders for Phase II reports (come on... we all know this happens), or let's just slash the price to get work in the door; then they are not giving the Phase I the credit and resources that it desirves.  The Phase I is an investigative product, used to evaluate potential risks, and and aide your client in a decision making process.  Companies who take the relationship with the cleint seriously, will take this step in the due diligence process seriously also.  We don't just want to rush to closing, or do a Phase II on every gas station.  Take the role of consultant to the client seriously, and charge a fair return for your efforts. 

There should be someone within the process who peer reviews these reports, that someone is the gatekeeper of quality and training opportunities for the assessors.  This should be a senior level person, who within the company, is vested in the Phase I process.  Not just someone who is availalbe to read Phase I reports for spelling errors.

Assessors should have adequate experience, an investigative spirit, and a passion for the process.  They should also be professional at all times in attitude, speach, dress, etc.  They are an extension or representation of the client, in our case the bank.

Hope these comments are welcome, there are many people out here who think quality is critical.

Another opinion: the best EP for a given project may depend as much on the project as it does the EP.

If I am involved in a transaction on a property where the likelihood of contamination is truly low and there isn't much reason to go beyond the absolute minimum requirements of ASTM 1527-05, that's one kind of project.  If I'm involved with an inner-city property where future development may require construction in areas that may have been impacted by a variety of commercial activities (dry cleaners, auto repair shops, coal ash placement, etc.), that's another.  Industrial property transactions are a third.  And I wouldn't necessarily want the same consultant on all three types of project.

For an industrial project, I'd want to make sure the consultant had experience with the processes used - if a coke plant, I'd want him to have coking experience.  If a plating shop, plating experience.  And so on. Here, the purpose of the Phase I is primarily to develop the scope for Phase II activity.

For inner-city properties, I'd most want the consultant to have specific experience working in that city, and even in that neighborhood.  Things like understanding the prevailing concentrations of PAHs due to widespread deposition of bottom ash as urban fill are important when looking at BER for such a project.  For this type of project, it's usually all about the BERs.

Finally, though I might want a very research-oriented EP for the above two project types, I perhaps wouldn't want the same guy doing a Phase I on an agricultural property in rural Iowa, or a multi-family property in an outer ring suburb of Nashville.  My experience is that such EPs often get enamored of chasing down blind alleys and digging into a bunch of inapplicable resources because they just can't believe it's possible to do a credible Phase I without putting in at least 60 hours on the project. What's needed is to get the (appropriate) clean bill of environmental health with as little money expended as possible.

What constitutes "good" EP training? How would a bank, especially a community bank that might not have a great deal of experience hiring EPs, know whether the training was good?